MaiCoin Digital Asset Weekly, Jan 17
COMMENTARY
Digital Assets followed up on last week’s gains with another +13% this week. Gains this week were broad based with 75% of the top 100 coins and tokens ending the week higher. Gains this week were led by smaller coins and tokens with X-BTC Crypto +22% outperforming BTC +9% and lifting total Digital Asset market cap to a 64 day high of US$240B. Reported on exchange volume was very active this week at a daily average of US$109B, +40% WoW.
BTC forks saw massive moves this week with BSV +162%, DASH +142%, BTG 129%, BCD +108% and BCH +44%.
Gains in BTC clones were driven by rumors that BSV founder Craig Wright had proven control of a Satoshi Nakamoto wallet with 1.1 million BTC. This story seems to have caught traction with Chinese retail investors expecting lagging BTC forks to the be the beneficiary of a rotation out of BTC. Okex and Huobi, led exchange net inflows this week while fund flows at major Western exchanges were largely neutral to negative.
The rumors looked to have grown out of the latest twist in Wright’s ongoing legal battle with the estate of a deceased business partner. Wright, who has repeatedly claimed that he is the man behind the pseudonym Satoshi Nakamoto, would receive access to a 1.1 million BTC (US$8.5B) blind trust in January via a bonded carrier. US Judge Beth Bloom has given Wright until Feb 3 to reveal wether has received access to the funds.
Looking into next week, would expect some air to come out of some of the week’s biggest outperformers. BSV and BTG look especially susceptible given they are trading 148% and 112% > their respective 50 Day Moving Averages.
BTC’s outlook looks slightly more healthy with outperformance vs its 50 Day MAVG at just 15% and an RSI of only 65. After ending the week above $8,400 — the VWAP (value weighted average price) for the current 4 year cycle — BTC’s next line of resistance is the 200D MAVG of $9,200. It’s worth noting that the total market capitalization of Digital Assets broke above its 200 Day Moving Average already this week and that BTC has relatively little volume between the current price and ~ $10,100. Meaning that BTC could get pulled higher by outperformance in smaller coins and tokens and has relatively little volume to act as resistance above $9,200.
Interestingly, 2020’s VWAP looks on track to gain to ~ $8,200 this weekend — the first annual VWAP increase since 2017. This means that most people that bought BTC in 2017 are down only ~ 20% and most people that bought BTC in 2019 will be back in the money.
THOUGHTS
Who is driving this rally?
Data aggregated from TokenAnalyst.Io suggests that it’s Chinese retail.
- Exchange Flows
- The chart below shows that Huobi and Okex (China’s main exchanges) are significant standouts in terms of fund flows. Major Western exchanges like Kraken and Bitstamp have seen neutral to negative fund flows over the previous 7 days.
2. Price Performance
- Gains this week were led by coins and tokens with significant followings in China, including: BSV, BTG and BCH.
3. Wallet Balances
- The number of addresses with >1 BTC balance has accelerated sharply over the previous 2 weeks.
Is Craig Wright Satoshi Nakamoto?
How Many Wrongs Make a Wright?
This is a great summary of CSW’s long history of bombastic claims, exaggerated credentials, debunked cryptographic proofs and altered documents.
The current round of CSW claims making news are related to the the ongoing Kleiman suit. Dave Kleiman was a former business partner of Wright who passed away in 2013. In 2018, relatives of Kleiman filed a lawsuit against Wright in the US purporting that Wright fraudulently acquired large numbers of BTC owned by Kleiman by forging various documents.
A report from BTC security firm, WizSec, calls into question the actual existence of the 1.1 million BTC in question. A number of the addresses submitted originally to the court look to be simply large, early BTC addresses that have an identified owner that is not Craig Wright (many are Mt Gox addresses).
The report concludes “…the lawsuit is a nonsensical fight over unrelated funds that never belonged to either party…”
NEWS
- BSV price moons as CSW claims (again) he as access to Satoshi coins
- Wright has been granted until Feb 3 to prove control of 1.1 million BTC
- Wright has claimed that a bonded courier will provided information allowing him to access the funds in Jan
Judge Bloom: “[Wright] was evasive, refused to give and interpret words in their very basic meanings, was combative and became defensive when confronted with previous inconsistencies…”
- Bitmain allegedly investigated by DoJ, — IPO and Texas farm plans shelved
- Reports include accusations of equipment sales to Bitclub
- Bitclub was a ~$800M Ponzi scheme broken up last year
- Bitmain has also recently lost access to a 300 MW mining facility in Rockdale Texas that would have been one of the biggest in the industry - Australia’s oldest crypto exchange acquired by Kraken
- Bit Trades was established in 2013
- Kraken plans to host AUD exchange and OTC trading services - CME debuts BTC options
- Offers investors another regulated method to trade BTC
- Will also allow miners another means to hedge price volatility - Grayscale posts record year: >$600M in inflows, 71% from institutions
- Bulk concentrated in Grayscale Bitcoin Trust. Total of $471M
“The asset class is experiencing increased validation from legacy companies like Fidelity and CME, signaling to institutions and the investment community as a whole that crypto as an asset class is here to stay.” - Japanese regulators want to cut crypto leverage cap from 4x to 2x
- Follows a leverage cap of 4x implemented last year
- Japan was originally quite progressive in establishing crypto regulations, but has since limited the number of exchanges able to add new members, required privacy coins to be delisted and imposed restrictions on leverage - CFTC: BTC and ETH are commodities, XRP unclear
The “regulatory status of XRP has been unclear so far, particularly after Ripple, the company behind the token, faced a class-action lawsuit alleging that it held an unregistered sale of securities” - SEC warns that IEOs may be breaking securities law
- This shouldn’t be surprising
- If anything IEOs increased the regulatory risk for exchanges facilitating them by playing an active role in underwriting and distribution
- Potentially problematic for Binance and others most active in IEOs - BTC address transfers US$1.1B in value … pays $80 in fees
- The ability to transfer value in this size to any individual, country or group on the planet for a minimal fee — in minutes — is unique to BTC
- Bitfinex’s CTO, Paolo Ardonio, later confirmed it was a Bfx wallet top up - Malaysia's SEC bans ICOs sets rules for IEOs
- Takes effect 2Q20
- To issue IEO’s have to be registered as a Digital Asset Exchange , be based in Malaysia and minimum paid-up capital of US$1.2M
CHARTS
- Chart 1. BTC annual volume weighted average price
- BTC 2020 VWAP will likely improve to > 2019 VWAP this weekend
- Chart 2. RSI — Top 20 By Volume
- BTG still at an RSI or 82. BSV back to 66 after breaking well above 90
- BTC well below average at 65
- Chart 2A . % vs 50 D MAVG, Chart 2B. Position in 52 Week Range
- BSV still a massive +147% > its 50 Day Moving Average
- Big caps BTC and ETH much less exuberant, modestly > 50D MAVG
- Chart 2B: 100% = 52 week high, 0% = 52 week low
- FTT (platform token for FTX Exchange) at the top end of its range
- ETC also at the top half of its 52 week range
- Chart 3. BTC vs X-BTC Crypto
- X-BTC Crypto rallied this week, narrowing the 1 year performance gap
- Chart 4. BTC Price vs Volume
- BTC price is now testing to break back above the 200 Day Moving Avg
- There’s very little volume between the current level and ~ $10,100
- Chart 5. Total Digital Asset Market Cap
- Above the 200 Day Moving Average for the 1st time in 72 days
